Thursday, August 1, 2013

The Bag Tax Game

I've been wondering, if given the two choices, which is the more economical choice for the grocery consumer:
A bag tax or a sales tax on groceries? Of course, a bag tax (or bag fee, as some newspapers put it) is avoidable-- just bring your own bag. So the following exercise is for those who don't want to change their behaviors:
-I had the opportunity to test this idea when I went Chinese-grocery shopping in Fairfax, Virginia with Mother. Fairfax does not have a bag tax, and the State of Virginia charges a 2.5% tax on groceries, so of the $52.00 grocery bill, $1.30 went to the Governor's pot. And we got 12 plastic bags from the trip.
-In the City of Washington, DC, there is no sales tax on groceries (soft drinks aside), but grocery bags (paper and plastic) are taxed at a nickel each. So 12 bags would cost 60 cents in all.
--Thus, if the choice ever came up between implementing a grocery tax and a bag tax, go with the 5-cent bag tax.
However, there are some cities that have chosen to be more "progressive" with the bag tax. At 10 cents per bag, as Los Angeles charges for paper bags*, a sales tax on groceries could be a better option for those refusing to part with their disposable grocery bags.
The bag tax vs. grocery tax argument is pertinent in DC because our bag tax is applied only at food sellers, many of which fall under the tax-free grocery category. Therefore, your Neiman Marcus bag is still tax-free. (The purpose of the bag tax was to cut down on plastic bag litter; and grocery bags were the main culprits). The number of plastic bags you receive from a grocer is determined by the volume of the material; or weight, if double-bagging is concerned. Thus $2 of Ramen noodles can fill one plastic bag before $200 of caviar does (yes-- I once saw $50 small jars of caviar being sold on the shelf of Safeway in Georgetown, DC). In my example, we had a "well mixed" selection of groceries.
Back to Fairfax, Virginia. Currently, the State doesn't allow cities to have a bag tax. If the green light was given, politically competitive Fairfax seems unlikely to start a bag tax. However, some politicians in Arlington, VA (across the river from DC) wish to start a bag tax on top of the existing grocery tax.
Some of my readers may think that I'm talking about "crazy and radical ideas". In much of the country, talk of a "bag tax" is a moot and foreign subject. ("Seriously, that's the way the coastal people do things?")
So what do I do in DC? Many of the groceries in DC offer "bag credits", that is, you get a nickel off your grocery bill for each of your own bags you use (CVS, Trader Joes', Whole Foods). By reusing one bag at the grocery store, and getting one new bag, I can continue to expand my 'stack' of plastic and paper bags at no cost, same as always. And if don't need more bags, then I can enjoy that nickel off the grocery bill.
Thanks for reading.
*Source: http://www.huffingtonpost.com/gernot-wagner/la-plastic-bag-ban_b_1580707.html

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